The US secretary of defence, Robert Gates, arrives in the Indian capital, New Delhi, next week to promote a $10bn jet fighter contract, underlining the country's emergence as one of the world's biggest military markets. To update its Soviet-era arsenal India says it will need to spend $45bn in the next five years, and it has been courted by western states that are barred by arms embargoes from selling to China, the other expanding Asian military power.

US officials admit in private that arms sales to India also cement strategic ties as a hedge against Beijing's growing clout in Asia. Gates's visit, due next Tuesday, comes just before a March deadline for bids on the contract for 126 new fighters.

K Subramanyam, a defence analyst, said: "With the Americans you purchase not just weapons but a security relationship. The Saudis build it into their calculations. No surprise if we do too."

The US will be competing with Russian and European rivals to sell the Indian air force a new "strike capability". The Eurofighter Typhoon, which has been developed by Britain, Italy, Spain and Germany, is also being considered by Delhi.

However the rising defence budget, which dwarves spending on education and health, has met mounting domestic criticism. Praful Bidwai, a prominent columnist, said defence accounted for almost 19% of government spending. "We spend 1% on public health and education is 5% or 6% of the outlays." "[India is] a poor country and we are spending like crazy on guns. A government report last year found that 77% of Indians live on less than 20 rupees [25p] per day."

India's modernised military has seen it acquire a "power projection" far beyond its shores. It boasts the capability to shoot down incoming missiles and says it can launch missiles from air, land and sea.

There is little doubt about its ambitions. In the summer of 2006, as Israeli air strikes shook Lebanon, four warships from the navy arrived off the Lebanese coast to rescue 2,000 South Asian nationals. Indian air force pilots have repeatedly defeated their American counterparts in mock dogfights. War games last year off the country's south-western coast, with the US, Australia, Japan, and Singapore, triggered a formal protest from Beijing.

The arms deals and new strategic relationship with the US have mollified Washington, which had been angered by the Indian government's failure to push ahead with a nuclear deal that President George Bush had called "historic". Under the accord India could import nuclear fuel and reactors despite having tested nuclear weapons but not signed the non-proliferation treaty. However, the deal has been kept on ice after opposition from the government's communist allies.